What Every Searcher Should Know Before Hiring an M&A Lawyer | Joel Ankney

In this episode, Nick speaks with veteran M&A attorney Joel Ankney, author of Here's the Deal: Everything You Wish a Lawyer Would Tell You About Buying a Small Business. Joel shares his journey from Big Law attorney to running a boutique practice focused on small business acquisitions and explains how an unexpected call from a professor introduced him to the emerging world of entrepreneurship through acquisition. 

Drawing on more than three decades of transaction experience and roughly 125 self-funded ETA deals, Joel discusses how the search ecosystem has evolved from a niche concept into a mainstream path to business ownership. He explains why he is seeing more searchers raise outside capital, how that trend is changing deal structures, and the additional risks and complexity that come with investor-backed acquisitions. 

The conversation focuses on the questions first-time buyers most frequently ask lawyers: when to hire counsel, what lawyers actually do during a transaction, how due diligence should be approached, how long deals really take to close, and what buyers should expect to pay. Joel shares practical examples of mistakes he has seen in letters of intent, why engaging a lawyer early can save significant money and headaches later, and how legal issues can derail a transaction if they are not addressed upfront. 

Joel also discusses the role of AI in dealmaking, the importance of state-specific legal knowledge, how lawyers and accountants should work together during diligence, and the characteristics of the most successful acquisition entrepreneurs he has worked with. 

For anyone considering buying a small business, this episode provides a practical roadmap for navigating the legal side of acquisitions and avoiding some of the most common mistakes first-time buyers make. 

Transcript

SPEAKER_00 0:00

Welcome to Search Funded, the Entrepreneurship Through Acquisition podcast. I'm your host, Nick Lal, and today I'm joined by Joel Anckney, a business acquisition attorney who has spent more than three decades helping entrepreneurs buy and sell small businesses. Joel graduated first in his class from William and Mary Law School and has closed more than $400 million in business transactions over the course of his career. Many of you may have heard of Joel's book, Here's the Deal, Everything to Which a Lawyer Would Tell You About Buying a Small Business. It's become part of the curriculum in a lot of the ETA classes and business schools. And since the first ex since the first edition, he has worked on roughly 125 deals for self-funded buyers, spoken on more than a dozen ETA podcasts, and sold over 10,000 copies of the book. What's interesting is that the first edition actually came out before ETA had really become the ecosystem that it is today. So the second edition, which he published recently, is much more specifically tailored to searchers and acquisition entrepreneurs. And so that's why I thought it'd be really exciting to have Joe on the podcast today. When it comes to his practice, he has uh worked with an incredibly wide range of industries and deal types from construction firms and fitness clubs and yoga studios to IT service businesses, egg farms, and hair salons. But most of the deals that he works on range from about $10,000 to $5 million in purchase price, but he's also worked with sellers to private equity firms and traditional search deals approaching $20 million. So really honored to have Joe on the podcast. I've actually read the first edition of his book when I was first getting interested in the space a few years ago. So I'm really excited to dive deeper into his experiences. He's worked with so many searchers and acquisition entrepreneurs, and he brings a perspective that we haven't had on this podcast yet, which is that of the legal side, one that is actually very important, can really make the difference between whether the deal is successful or not, or uh how your life ends up going as an acquisition entrepreneur after the deal gets done, uh if you didn't engage with someone like Joel. Maybe if you could talk a little bit about initially opening your own practice, writing the book, and what has changed since then and and now as ETA has become much more of a thing.

SPEAKER_01 2:18

Absolutely. Yeah, thanks, Nick, for having me on, for inviting me on. I always appreciate it when somebody reads my book and then uh tells me they'd like to talk to me. So my journey in ETA was almost accidental, if that makes sense. I started out shortly after law school as a merger and acquisition lawyer for a relatively large law firm and did that for eight or nine years. Uh our firm got acquired by a much larger law firm, and I just felt it was a good time to go out and start my own practice. That was about 23 years ago. In a way, I have a boutique type practice where I represent people who are buying and selling small businesses and also buying and selling commercial real estate. So I do a lot of these what I call ownership transitions, and I've always done it. In 2017, I decided to self-publish a book as a resource to my clients and potential clients who were about to engage in their first transaction. I wanted them to have a book as a resource to help set expectations, to teach them about the kind of the sequence and the rhythm of a transaction, or at least the legal process of the transaction, to hopefully ease some of their concerns and give them a resource that would answer their questions without having to call me or email me about certain basic aspects of a transaction. So I I've always been in the acquisition, merger and acquisition community, but I never knew about ETA until 2018 when I received a call from Mark Smith, who's a professor at the University of Illinois, and he actually an email first, and he just said, Hey, I found your book on Amazon and uh would love to use it for a new ETA class that I'm starting. Would you be okay with that? And would you also be interested in guest lecturing for us for one class period? Um I responded, absolutely, but you have to tell me what ETA stands for. I I had never heard of the concept or the approach or the model or anything like that. And so Mark was the one who introduced me to the ETA community. Um he used my book as uh part of his curriculum, and along with a couple of other books, with Walker Dybel's Buy Than Build and the HBR um Guide to Buying a Small Business. And so as a result, my book has been bundled up with those other two books uh for a number of years. And that uh experience with Mark really uh helped introduce me. I mean, I've met Walker Dybell, I've spoken at his acquisition lab, I've uh met a couple of other people through that University of Illinois connection. Ram Johnny has become a really wonderful friend and colleague and supporter. Um he's uh more on the traditional search fund side. And then I started going to some ETA conferences, I've spoken on some ETA podcasts. I kind of my big shocker was when Columbia Business School invited me to come speak to their ETA class. These were all just wonderful experiences. Everybody has been so gracious and kind. As a result of all that, though, uh, from about 2018 until really about 2025, I handled anywhere from say 20, 25, even up to almost 30 transactions a year for self-funded searchers. I think four or five of my clients have been interviewed on the Acquiring Minds podcast. Not to plug another podcast on your podcast. I'm sorry, I don't mean to do that, but it is an interesting podcast. It is but yeah, my journey and uh experience has been on the self-funded side, the kind of the some of the smaller transactions. Um, I I like your question about what have I seen change in ETA in that time period. That's a question that I have had a lot of self-reflection on in the past year or so. What I have seen change is I have seen the model change a bit where there are many more people in the space who are looking for to raise capital to do an acquisition. And so models that I had seen when I was at a larger firm many years ago are now have come, they've come from essentially middle market down into the ETA ecosystem and uh with some modifications. But I I've been really surprised is the wrong word, but I have seen this almost explosive or exponential increase in the number of searchers who are looking at a much more complex uh structure and model than I had seen for the first six to seven years of my experience in ETA. My my initial experience has always been with self-funded, not just self-funded searchers, but self-funded acquirers as well. So self-funded buyers. So uh my experience has been with not only do they use their own money to do the search, but then when they finally find their target and they need to put equity injection in, typically it's all their own money. And they're so they've got their own equity injection, and then typically they're gonna get an SBA 7A loan, and then on top of that, a little bit of seller financing, maybe five to 10% of seller financing to make up that equity gap for the SBA loan. Um, but again, I I'm seeing much more. Almost everybody who contacts me now, I ask them, you know, how are you gonna fund your purchase? And really, I'd say 95% of the people I've spoken to in the last uh 12 months are looking to raise capital. And so that's been an interesting evolution for me because I am not a raising capital is a separate transaction in my kind of my the technical view that I have. And so that capital raise transaction requires a different set of legal services uh to comply with the securities regulations. And I don't offer those services. And so as a result, my practice has changed uh over the last 12 months, where I've actually been representing a lot more sellers in the ETA space, which I really enjoy. I I I I've done that all my career. Um, about 50% of my transactions have have been sell side transactions. But in the last 12 months in the ETA space, and I've really been more on the sell side than on the buy side, just because of the way the model has changed.

SPEAKER_00 9:18

Sure, that's really interesting. I think as the space has gotten more popular and people have seen the returns that they can make. They're not just way more searchers, they're way more capital providers that uh want to get involved. And I guess as the space has become popular, I this is the model that people have whether it's uh Instagram or after EK class and uh in school, they've learned that they can go and and raise capital to different acquisitions.

SPEAKER_01 9:42

So right. It it has definitely become much more of a mainstream idea at the business school level and at the in equity or investor level. Uh ten years ago or eight years ago, it it it was more of a fringe idea. It kind of the small pockets of people at business schools who were like, hey, we found this this really cool new model and we're gonna try this. And there's some real good pros associated with that. There is a lot more capital to deploy out there. At least that's what I'm reading and hearing. And um that's good. That's good for the community. And here's an issue that I see, and this is a real personal opinion, so I hope people won't get too upset. But as a result of my observation that the model has changed, that there is more capital out there for people, it it seems to me like there are a number of searchers who are maybe shooting for larger transactions because they've got this structure that they want to build where they're gonna bring in a fair amount of equity funding or or investment uh capital raise. And so that gives them a view of, hey, I can instead of going for a business that might have a purchase price in the neighborhood of a million to two million, maybe now I can be looking at uh businesses in the three to five million dollar range or six million dollar range, and and that may be fine. But I've had a few experiences where I've had searchers approach their search that way, get deep into they've gotten into letter of intent, they've got a letter of intent signed, they get their diligence done, uh, they start working with their lender, and then if one little thing goes wrong, it's kind of like a house of cards. Like the investors get a little nervous and they might back out. I've seen that happen just once or twice. Uh, and so there is this kind of question that I have about is the availability of capital kind of skewing the way people are looking at their search? Like, are they right sizing their search or are they upsizing it in a way that might be a little bit more risky for them for the success of the search and the acquisition?

SPEAKER_00 12:00

Sure. That makes a lot of sense. The more steps you add, the more complex either uh becomes the larger business will obviously probably require a lot more um diligence and especially if you're also doing a capital raise at the same time.

SPEAKER_01 12:13

It's probably but to just give you a quick example, I had a uh a client a couple of years ago, a searcher who found a business. Um the business was let's just I'm gonna pick some numbers out here because I have to keep some of this stuff confidential, but the business was uh priced at about five million dollars. My client was trying to raise approximately $500,000 from outside investors to pair with his SBA funding, seller financing, and personal equity injection. During diligence or after diligence was over, everybody knew this because of going into this, but 80% of the revenue of the target came from one client, from one customer. And after we had gotten diligence was over, we were working with the lender, we had negotiated the purchase agreement, so we'd spent a lot of time and money and effort. The investors were on board, and the primary customer came back and said, our contract is uh up for renewal in about a year and a half, and we already know and we're telling you that we're not gonna renew because we're not gonna the budget's not gonna get approved for this. And obviously, as soon as they backed out, and that's gonna kill a deal anyway, right? You you potentially lose 80% of your revenue. But because that happened, obviously the investors were like, we're not gonna do this, then the lender was like, we're not gonna do this. And so that house of cards kind of fell. And that's just the more complex you make your deal, the more risk you take that you you've got to make a lot of different things work in order for the deal to close. It's not just one transaction at that point. The acquisition is one transaction, but the capital raise is a second separate but related transaction, and then the loan is also a separate. So you're really working three transactions simultaneously, and you've got to make them all work and get them all to gel and kind of sync up together. I have no opinion whether that's right or wrong. It just that model creates a different set of risks.

SPEAKER_00 14:19

For sure. And it's a lot to get done in 90 days, especially if you're doing it for the first time.

SPEAKER_01 14:24

Oh, yeah. And I'm really happy that you mentioned that. 90 days is like, well, that's one of the questions people will ask me initially is how long do you think it's going to take for us to get from letter of intent to closing? And uh I typically have always told people, hey, plan on 120 days to as many as 180 days, like four to six months uh to get the closing. And that freaks people out sometimes. I've certainly closed faster than that, but also that's not fast is not necessarily the norm. Again, the more moving parts that you introduce into the transaction, the more investors you introduce, the lender, of course, you've got the the seller and the and the seller's council, all those people are they're gonna be they're gonna they're gonna make the the timeline they're gonna become bigger risk factors in the timeline, I guess. I'm trying to find the right words, but that that's definitely your complexity is gonna impact your timeline for sure.

SPEAKER_00 15:30

Yeah, absolutely. I guess given that there is so much to get done and you obviously would benefit from people who've done it before. At what point would you suggest that uh a buyer does approach counsel or other professionals before uh deciding to purchase the building the business?

SPEAKER_01 15:46

Yeah, another great question that typically people ask me uh when they first contact me. Um sometimes I have a real kind of flippant response. I'm like, hey, you should engage a lawyer before you sign any legal document, right? Like that's kind of the bare minimum. If you're gonna sign an NDA, if you're gonna sign an LOI, a lot of my clients, and I'm okay with this, will draft their own NDAs and draft their own LOIs. And in in many instances, I'll provide them with my template and just say, hey, here it is, you know the kind of the facts, the terms, just plug everything in, but let me have a look at it. Let me take a look now. Every attorney is probably gonna have a little different approach. I was speaking on a panel in April, and one of the attorneys said, you know, it's probably okay to have AI like Chat GPT or Claude or something review an NDA for you. They're so basic and and they're so common that uh AI should give you a really good review. And I I I tend to agree with that, but I am a little old school. Um I mean, I use AI in my practice every day. Uh that's a goal that I have, and it's been wonderful. It's really enhanced my practice and the way I can serve my clients. Uh but I I would say even for a quick look, if you if before you sign anything, I would suggest. And and for example, for the letter of intent, I know that there are templates everywhere on the internet, including some of my own templates that are out there that are pretty easily available. And that's great, but a lot of times what I've found is that business people will draft their letter of intent in a way that uses business language. And when they let me look at it, I might tweak the language a little bit to use more legal language that the seller's lawyer is going to understand, and also legal language that the lender is going to understand as well. And there are some concepts that some buyers aren't as aware of uh that I might, I'm I'm like, okay, I hear, I see what you're saying here, but that's kind of the business speak way to say it. But the way it's gonna show up in the legal documents is like this, and I can change that language a little bit to make, especially if you have a seller who has a lawyer who's familiar with MA deals, they're gonna they're gonna see things and say, okay, yeah, I understand what this means. And so uh I don't think it ever hurts to call a lawyer early. I will absolutely spend 30 to 60 minutes on the phone with somebody and talk through their concept and their transaction. And at the end of that phone call, I may say to them, what you don't need me yet. But but when you get to this point, get back in touch with me and I'll arm you with some information on the phone call, but you don't need me yet. Or I might say to them, I'm not the right guy, I'm not the right fit for you. And here are a couple people that I know that you might call for help. But I feel like in the ETA community, a lot of the lawyers that I've run into and that I've known are very generous with the information. And so I don't think you should feel afraid to contact a lawyer sooner rather than later, especially a lawyer who is well known in the community. So I think the worst thing to do is to be afraid to call a lawyer because you think they're gonna charge you a lot of money, and then you've waited too long, and then by the time you get the lawyer engaged, you kind of have painted the lawyer into a corner because they can't negotiate you out of some of the things that you've already agreed to or put yourself into. Um, and that's riskier than anything. I the thing that I kind of want people to understand is that, yeah, lawyers cost money, that's for sure. But the some of the things that a searcher is going to do at the beginning of their search shouldn't cost a lot of money from a legal perspective. Having a lawyer look at an NDA for you shouldn't shouldn't cost you very much money. Having a lawyer look at an LOI for you shouldn't cost. And what I mean by that is a couple hundred dollars, $500 maybe. Have $500 to $750 for a lawyer to look at an LOI for you, that's worth the money, as far as I'm concerned. Uh, because that LOI is going to set the stage, that's the place setter for the rest of the deal. And it's really good insurance to kind of save yourself from even higher. If we've got an LOI that is doesn't really reflect the transaction then or reflect some of the more uh complicated terms of the transaction, when we get to the purchase agreement phase and we start negotiating and drafting and things like that, that's where you're gonna spend most of your money. And so if you want to save yourself on legal fees at the purchase agreement phase, you might invest a little upfront in the LOI phase uh to get it right so that when we get to the purchase agreement phase, we can look at the LOI and look at what we found in due diligence and get a nicely tailored purchase agreement without a huge amount of back and forth with the seller's lawyer. Uh because now all of a sudden they think the seller says, Oh, you're changing all the terms, you're you're changing things. So it's a long-winded answer.

SPEAKER_00 21:16

No, it's all I think this is really helpful for anyone listening. And I I think in your book you also made the point that if you already decide the purchase price before you even speak to an accountant, there's not really much that the accountant can do. And I think it's kind of the same in in this case. I was wondering if you've seen things go really bad in cases where people did engage the lawyer too late, or any mistakes you've seen that people have made if if they didn't seek counsel when they submitted their LOI or on in other stations of the transaction.

SPEAKER_01 21:48

I have seen and again it it goes back to what I just explained. That it puts the lawyer, the the buyer's lawyer in a Situation where they're trying to undo things. For example, I've had people submit LOIs. This is several years ago, but I had several people submit LOIs without having a lawyer involved. They were getting an SBA loan. They were also getting seller financing, but they didn't even know what the concept, the standby concept meant for the seller note. And so it wasn't in the LOI that the seller's note was going to be on standby behind the uh SBA loan. And so uh when we finally got to the purchase agreement phase, and I put language in the purchase agreement about the SBA has first priority and that the the note is the seller's note is going to be on standby for five years and things like that. I mean, that creates a huge uh problem because most sellers don't know, they've never done a deal before. They don't know what standby means. I've had sellers say to me, Well, I'm 75 years old. If I'm on standby for seven for five years or even 10 years, I may die before that money ever is due. And so uh in a couple of situations, I've never had anybody back out of a deal because of that, fortunately, but it's created two or three or four weeks of extremely tense negotiations where the seller is ready to walk away and the buyer is kind of freaking out because they're trying to figure out how to make the seller happy again. Um but the thing is you can't negotiate around that SBA. I have instances where that the letter of intent has the biggest impact on the transaction if it's done well, even if it's done in a way and and problems come up during diligence or something, at least, you know, if we can, you know, for example, I know a lot of people, and I think it's a good idea, put an assumption in the letter of intent, just a sentence or two about here's how we arrived at the purchase price. And sometimes I've seen people say things like, if we find during diligence that our assumptions aren't correct, we can come back and talk about purchase price again. But um I think one of the main things is you want your letter of intent to give you to set kind of set the place for the transaction and also to maybe give uh an opportunity for renegotiation if some of your assumptions or if if due diligence results uh indicate that some of your assumptions or your initial uh evaluations are unsupported.

SPEAKER_00 24:41

Definitely it's this kind of knowledge, which is why you probably should speak with a lawyer. I mean, ChatGPT can probably create a pretty good looking LOI, but then because it doesn't necessarily or at least you're not prompting it with the knowledge of someone who's done a lot of transactions, there are things like that actually could really cost you if you miss them.

SPEAKER_01 24:58

So I think this is I I think that's a a really astute observation is that because I use several AI products in my practice to help me with my drafting, frankly. But I also have a lot of experience from my prompts and I also have templates that I start from. I don't use AI to do something from scratch, typically. But what I've found is I've used AI over the last year or so for drafting, is that many times if you ask it to draft from scratch, like you ask it to draft a letter of intent from scratch, from whole cloth, basically, that you it misses a lot and you don't know what it's missing. That's the bigger issue. Like it looks real pretty and shiny because it has maybe 75 to 80 percent of the fundamental stuff that it needs to have, but you don't know what the other 20 to 25 percent is that's missing. And typically it's missing because you've got some unique terms in your deal, or you've got you're approaching your structure in a little differently. And Chat GPT or or Claude or whoever you're using doesn't know that, you don't know how to prompt it to tell it that. And so it just gets missed. And that's the bigger risk, I think, is just missing stuff.

SPEAKER_00 26:15

Yeah, it makes a lot of sense. And uh I remember another point you made in your book was also that depending on the market you're in, there may be different regulations when it comes to businesses, and so it's helpful to have a lawyer that uh understands that particular market. I was wondering if you have any advice in general just how people could select the right lawyer to help them with uh their transaction.

SPEAKER_01 26:40

Well, I have some stronger opinions on this than some of my uh younger contemporaries, I think. If you're looking for a lawyer, certainly you can do some searching online. There are a lot of ETA lawyers who are very active in on social media, whether it's X or LinkedIn, they're easy to find. The other way to do it, I think it's kind of the old school way, but if you have another advisor that you trust like a CPA, you might ask them. A lot of times I work hand in hand with a CPA, and so that CPA and I know each other, we know how to work together, and we tend to refer clients back and forth depending on, you know, if the client comes to me first and says I need a CPA, I'll send them to my colleague. And if they come to the CPA first. So I think asking trusted other trusted advisors is another good way to find them. I think what you're mentioning about a point I make in my book is that lawyers are licensed by state, and most of us only hold a license in one or two states. We don't hold licenses across a region of states. Uh, although there are law firms that have lawyers that hold licenses. So one lawyer in the firm might hold a license in Florida and another one might hold a license in Texas. And by doing it that way, by having a um kind of a stable of lawyers who are licensed in multiple states across the country, they're able to cover uh those areas. Now, a lot of stuff that goes on in ETA on the legal side is similar from state to state, but occasionally you'll run into a state that has uh you know different state-specific laws, and Maryland is a very good example. Maryland has a tax that the buyer has to pay in an asset sale. So they tax, Maryland taxes the value of the hard assets that are purchased in a transaction. Um, and the buyer is responsible for paying that, and they have to pay it shortly after closing. So, for example, I did a deal several years ago in Maryland where, and it's called the bulk sales tax. No other state that I know of has this similar tax structure, but we did this deal, and my client ended up having, as a buyer, ended up having to fund another uh approximately $20,000 in order to pay those taxes. And so if you were gonna buy a business in Maryland, for example, and you didn't know that that tax existed and that it was the buyer's responsibility to pay the tax, you might end up biting off a little bit more than you can chew because a couple things might happen. One is you might buy a business that where the assets are gonna impose a tax on you that you didn't anticipate. And so you might find that out later on in the transaction. Sometimes you might have heard of people getting surprised just prior to transaction when they see the settlement statement or uh the closing statement, and they're like, wait a minute, what's this tax for? So again, knowing that if you had a Maryland licensed attorney, and I know this because I worked with a Maryland licensed attorney who taught me this, who showed me this was going to happen in a transaction. And just having that that input early on in the deal, we were my buyer wasn't real happy about it, but at least we helped them with that expectation. They had enough time to ramp that up and plan for that and also to get comfortable with it. And it didn't really slow the transaction down. So I I don't know. There are other states, uh, even in Virginia where I am, certain non-competes are now unenforceable in Virginia. And so that's good to know, right? In Virginia, non-competes with what they call low-wage uh employees are unenforceable, but they define low wage in a way that I think right now, if the individual's making, I think it's approximately less than $78,000 a year, that non-compete with them is unenforceable. Now you could see where that might be a problem if you were a buyer and you were gonna buy like a uh landscape services company or a uh HVAC services company, you might have some key employees who are making less than that amount of money that you want to try and make sure you you you get them locked up so that you don't have a problem after closing. But so anyway, it's not there there are a lot of things in ETA deals that are the same from state to state, but occasionally you're gonna bump into something that's a little different. And so I think it is good to have a local lawyer uh who can help you wade through that, or at least what I've done in the past is I have used uh I have hired a lawyer license, like for example, in Illinois, when I'm doing a transaction in Illinois, I've hired a local lawyer in Illinois and given them a set of like you know 20 or 30 questions and told them, hey, spend two hours, answer these questions for me. And essentially that helps me understand if there's anything local that I have to be worried about.

SPEAKER_00 32:07

Sure, and definitely it seems like another example of just paying a little bit up front could take you a lot longer down the line, given that there probably might there can there can be things out there that are are different in different places, and you really need to have someone who knows more than just what you can find online or through a through an AI prompt. I guess maybe just uh another question would be What what do you actually help the person with uh when they do engage you? I mean, I'm sure people probably come to you asking, can you help with diligence and how long does the legal process take? Things like that. I was wondering if you could just talk a little bit more about what you do and probably what most ETA lawyers do with uh with the searchers once you do get engage in an agreement.

SPEAKER_01 32:50

Yeah, sure. Uh structure is one, I think one early thing that we might help with. Most lawyers are gonna structure is for many deals is is pretty traditional. Like if you're doing an asset deal, we're gonna structure that a certain way. We're gonna suggest that you start a separate entity like an LLC, and the lawyer is gonna help you with that. There, I mean, I've done a couple of deals where structure has been a little bit more tailored or unique just because of the nature of the industry or the business or the way the the seller. I mean, I've I've I've worked on a transaction where the seller held certain assets in two separate entities, and there were reasons for that to kind of bifurcate the potential liability. And so looking at that, the buyer then wanted to structure, create a mirrored type of structure with a couple of different LLCs and do uh really almost two separate transactions uh between all four LLCs to make sure that the liabilities stayed in bifurcated and separate from each other. So that's structure is one thing a lawyer should help you with uh during diligence. Absolutely. I mean, I always tell people to get their financial due diligence completed or mostly completed first before they really have the lawyer help them with legal due diligence. Because if you do your you spend your money and your time doing your financial due diligence and you find out that there's some concerns or it's not going to support the deal, then you just back out of the deal and you really haven't spent much money on a lawyer at all at that point. Um on the flip side, if you engage the lawyer right in the diligence process at the beginning, and you spend a lot of money on the lawyer doing legal due diligence, and then you find out there's a financial issue, now the lawyer's due diligence really doesn't help you that much, and you've spent a lot of money on it. So, yeah, we do diligence, but I think it's it's a pretty um conventional uh approach to say spend the first portion of your due diligence period focused on financial due diligence. The lawyers are gonna come in and look for certain things once you're happy or comfortable with the finances. Uh, and and those things are are we're gonna look for uh risks, um, we're gonna suggest ways to perhaps investigate risks a little deeper. And those risks may either help you decide, what we find may help you decide either to terminate the deal, or in more instances, what I found is that what we find in legal due diligence will help us as we draft and negotiate the purchase agreement, uh, because some of those things, some of those risks we find can be mitigated through the purchase agreement process. Um then after that, I mean, really again, I spend a huge amount of my time on the purchase agreement. The buyer's lawyer traditionally drafts the purchase agreement. Uh depending on the sophistication and experience of the seller's lawyer, uh, the buyer's lawyer may also end up educating to some degree the seller and the seller's lawyer about market or customary provisions in the purchase agreement and explaining them and things like that. But I I I tell people, I tell my clients that I mean knowing who the seller's lawyer is is a really significant factor in helping my client uh anticipate how the negotiation process is going to go. The um once the purchase agreement has been finalized, of course, I'm also coordinating with my buyer's lender as well to make sure that the lender is happy with the purchase agreement. And maybe they they might have certain input on the purchase agreement as well. Uh but once it's finalized, then there are a number of what I call ancillary closing documents, things like bills of sale and uh contract assignments and lease assignments and things like that. And those documents typically get drafted pretty quickly because there's not a lot of negotiation necessary on those documents. And most of us use templates that are market or customary, and so uh, but they have to be drafted and they have to be circulated and and approved. The seller typically has just a couple of documents, closing documents to draft. And many times uh what I've seen is as the seller's lawyer will use the template that I use for my buyer side closing document to draft, and so there's not a lot of negotiation required there. And then finally, we get to the closing, and uh I do get that question a lot about whether as the buyer's lawyer I can be the closing agent or the settlement agent. And typically the answer is yes, as long as the lender is okay with that, then I will be the one who runs the logistics of the closing. I'll manage the closing. So I'll on the day of, and the closing may not be an event, it may be more like a multi-day process where uh we might collect. I just did a closing a couple weeks ago where we collected signatures the day before. We held them in escrow, and then on the next day, uh uh once we showed everybody the signatures, the money funded, it all comes into my trust account. And I have a closing statement where I disperse all the money, I send all the wire transfers out to pay off the seller's uh creditors so we can get liens removed, and then the balance gets funded over or transferred over to the seller. So yeah, that's in a in a nutshell, that's kind of what a buy-side lawyer should should handle for you.

SPEAKER_00 38:51

Definitely. It's all really important stuff that I think is pretty necessary for any transaction. So you should probably start thinking about who you're gonna have do that for you uh before you even get started. Maybe just as we're running up on time, a last question would be what are some of the deals that you've enjoyed the most, or what types of deals in general have been the most rewarding for you?

SPEAKER_01 39:12

Yeah, I have enjoyed I the deals I've enjoyed the most are the deals where my buyers, my searchers are kind of include me as part of their advisory team in a horizontal hierarchy, if that makes sense. In other words, the ones that I haven't enjoyed are the ones where it's been more vertical, where the client has basically looked at me and said, You're a service provider, I'm going to manage you, you're going to do the deal the way I want to do it. And uh they're less likely to listen to me and my input and my advice. Those deals are are tend to be a little bit more difficult. But some of the deals I've done, and and there are a couple again. I mean, I did a deal a couple years ago with a guy named Enrique Rodriguez, and um he bought a uh uh commercial electrical contracting firm in Northern Virginia for uh, I mean, he this is all public because he's been on another podcast and talked about it, but um, he bought it for about I think about $450,000, and within 12 months he had grown revenue to like 4 million. And uh he was just a joy to work with because he did a lot of prep himself on the business side. He also was very good at filtering issues. Like I would bring an issue, I'd say, hey, you know, I uh I discovered this during due diligence. Uh here's what I think the risk is, and here's how I would uh suggest we might um resolve it. And he would say to me very quickly, Well, let me think about that. Uh, but a lot of times he would say, that's not important to me. I'm okay if we just keep going and we just kind of move forward. I don't want to go back and try and negotiate that with the seller. And and that was a really clients like that who kind of know what they want to do, are able to assess risk on their own, and uh are willing to take a few risks. They're they're they're really fun to work with. I've worked with a lot of people who have been just fantastic people who have, again, just we work we collaborate instead of uh kind of have this top-down relationship. Those are those are the better deals to work on for me.

SPEAKER_00 41:27

Definitely. I think that's one of the best parts of the space, is that there are way more people, I think, who take a much more collaborative approach than a lot of industries. And so Yeah.

SPEAKER_01 41:37

No, it's a great space. And I've had just I I've always been so grateful. I I always tell people that I I've been adopted into the space and uh I was invited into the room, and uh I I love it. Everybody has been good at conferences where I meet people who've read my book and talk to people and I've had a lot worked on a lot of deals with people, and uh it's just been I I would have never expected that all that to have happened because I wrote the book. I thought I was just writing the book to help, you know, as a resource for for my clients, basically. So so it's been great, it's been fantastic.

SPEAKER_00 42:18

I think that's what they say about the best books, the best businesses, they're ones that are uh solving problems for the people you so you've definitely added a lot to the space and really appreciate you joining, Joel. It's been an absolute pleasure having you on.

SPEAKER_01 42:29

Nick, thanks again. I I know I talked a lot, but uh it I'm easy to find on you know on the internet. So if anybody ever wants to email me or reach out to me, I love to talk about this stuff. And I may not be the right fit for most people now who are looking to raise capital, but but I'm still always uh happy to give my opinions about certain things and and things I've seen in the space.

SPEAKER_00 42:55

Absolutely. Thank you so much for joining.

SPEAKER_01 42:58

Okay, thanks again.